Tue, 14 Aug 2001

Laksamana given control over IBRA

JAKARTA (JP): President Megawati Soekarnoputri placed the Indonesian Bank Restructuring Agency (IBRA) under the control of State Minister for State Enterprises Laksamana Sukardi, a move some analysts said would expedite the agency's debt restructuring work.

Coordinating Minister for Security Affairs Susilo Bambang Yudhoyono said on Monday that Laksamana was given control over IBRA which was formerly under the finance ministry.

"The minister of finance should guard the country's revenues, and IBRA will be placed under Laksamana Sukardi," Bambang said in a press conference following the first Cabinet meeting of the new government.

The repositioning of IBRA was part of a major reshuffle of the government's economic portfolio.

Without IBRA, Bambang said, the finance ministry was to focus on its primary task to secure the country's fiscal sustainability.

Bambang gave no further details on the reshuffle and did not explain the legal basis of the President's decision.

Government regulation No. 17/1998 places IBRA under the finance ministry. Transferring the agency under Laksamana's office would then require a revision of the government regulation.

IBRA was founded in early 1998 to restructure bank bad debts and sell assets taken over from ailing banks and former indebted bank owners in the aftermath of the mid-1997 economic crisis.

To date, the agency is in control of nearly Rp 600 trillion (about US$69.76 billion) in assets, making it a key player in the country's economic recovery.

For this fiscal year, IBRA must raise some Rp 27 trillion in revenue to help fill the gaping state budget deficit.

"It has been decided to have the control of IBRA placed alongside that of state enterprises so that there is synergy between the asset sales of both," Finance Minister Boediono later explained.

The State Ministry for State Enterprises is also in charge of privatizing several state companies to raise cash to help finance the budget deficit.

Boediono said that the transfer of IBRA would also allow him to better concentrate on the state budget.

IBRA chairman I Putu Gede Ary Suta told The Jakarta Post he was unable to ascertain the impact of the new decision on IBRA yet, saying that he must study it first.

There has also been speculation that Ary Suta, who assumed the current position late in June, may be dismissed from the agency.

Analysts hailed the decision as helping both, IBRA and the finance ministry.

Research director at SG Securities Pte Ltd., Lin Che Wei said the privatization and sale of IBRA's assets were more or less the same thing.

Under Laksamana, he said, IBRA should be able to speed up asset sales, as a large portion of debts it took over belonged to state firms.

"And we know the times when IBRA's restructuring deals fell behind in their implementation was because the (previous) finance minister hadn't sign them -- he didn't understand them," he said.

According to him, Laksamana Sukardi is the right person to take control of IBRA.

"The man has integrity, and enjoys broad political support," he said.

Laksamana Sukardi belongs to the country's largest political party, the Indonesian Democratic Party of Struggle (PDI-P), led by Megawati.

He had served as State Minister of Investment and State Enterprises under the first Cabinet of former president Abdurrahman Wahid.

Laksamana's strong drive to stamp out corruption was evident in 1999, when he raised suspicion over loans provided by state Bank Negara Indonesia (BNI) to the giant textile Texmaco group.

Many believe his endeavor cost him his job at the time.

Abdurrahman, who reportedly had links with the Texmaco group, dismissed Laksamana on corruption charges that were never proven in court.

Che Wei said with Laksamana's reputation, the market expected him to purge IBRA from politically connected debt restructuring deals.

Also, the market hoped to see Laksamana make headway in IBRA's thus far feeble attempts to declare bankrupt uncooperative debtors.

He further suggested the government eliminate the position of IBRA chairman and entrust the role to the state minister.

It would help IBRA make faster decisions without asking for the state minister's approval, he explained.

Economist Faisal Basri, however, questioned the political motives behind the hand over of IBRA's assets.

He said Laksamana's connection to PDI-P was bound to raise suspicion whether making him responsible for IBRA was purely based on reasons of efficiency.(bkm/dja/05)